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Anderson Prospero

UCC Article 9 secured transactions - basic overview needed for loan officers

I'm a newer loan officer at a community bank and keep hearing about UCC Article 9 in our credit committee meetings. I understand we file UCC-1 statements to perfect security interests, but I'm honestly fuzzy on what UCC Article 9 actually covers beyond that. My manager mentioned it governs all our secured lending but didn't have time to explain the scope. Can someone break down what falls under Article 9 vs other UCC articles? I'm dealing with equipment loans, inventory financing, and some AR factoring deals. Want to make sure I understand the framework before I mess something up on a filing.

For a loan officer, I'd focus on three key Article 9 concepts: 1) Attachment (your security interest becomes enforceable) 2) Perfection (you get priority over other creditors) 3) Priority rules (who gets paid first in bankruptcy). Master those and you'll handle 90% of your secured lending issues.

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Attachment requires: signed security agreement, value given, and debtor has rights in the collateral. Usually happens at closing but can be delayed if collateral is acquired later.

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And perfection is typically your UCC-1 filing, though some collateral types require possession or control instead of filing.

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Just want to add that Article 9 interacts with federal law in some areas - aircraft liens under FAA regulations, ship mortgages, some intellectual property. Don't assume Article 9 always governs just because you're dealing with personal property.

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Good to know. We don't do aircraft or ship financing but I could see IP issues coming up with some of our tech company borrowers.

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Copyright and trademark security interests can be tricky - federal registration systems sometimes preempt Article 9 filing requirements.

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Sophie Hernandez

Security Agreement Elements - which of the following is not typically part of a security agreement

Hey everyone, I'm reviewing security agreements for our lending department and trying to understand what should and shouldn't be included in the actual security agreement document itself. I know there's a difference between what goes in the security agreement versus what goes in the UCC-1 filing, but I'm getting confused about the boundaries. Can someone help clarify which elements are NOT typically part of a security agreement? I've seen variations where some lenders include different clauses and I want to make sure we're following best practices. Our compliance team is asking me to create a checklist and I don't want to miss anything important or include unnecessary provisions.

One more thing - security agreements don't typically include dispute resolution procedures like arbitration clauses or forum selection. Those usually go in the main loan agreement. The security agreement should focus on the collateral and the secured party's rights in that collateral.

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Though some security agreements do include enforcement procedures like self-help repossession rights or notice requirements for Article 9 sales.

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True, but those are specifically about exercising rights in the collateral after default. Different from general contract dispute resolution.

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Thanks everyone, this really helps clarify the boundaries. It sounds like the main things NOT in security agreements are: UCC filing administrative details, loan payment terms, other creditor information, regulatory compliance matters, and general contract dispute procedures. The security agreement should focus on creating the security interest, describing collateral, and defining secured party rights in that collateral.

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Exactly. Document consistency is crucial for perfection. I'd recommend using automated verification tools like Certana.ai mentioned earlier to catch discrepancies before they become problems.

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Perfect, I'll use this to build our compliance checklist. Really appreciate everyone's input on this!

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Giovanni Gallo

UCC termination of security agreement - lender still showing active lien after payoff

My business loan was paid off 6 months ago but the lender never filed a UCC-3 termination. I keep getting calls from potential new lenders saying there's still an active UCC-1 on file showing them as secured party. The original security agreement covered all business equipment and I need to refinance with a different bank but they won't proceed until this gets cleared up. Called the original lender 3 times and they keep saying they'll 'look into it' but nothing happens. Has anyone dealt with a situation where you need to force a termination of security agreement? I'm worried this is going to kill my refinancing timeline and the new loan rate expires next week.

Update us on what happens! I'm dealing with a similar situation with Chase and curious to see what approach works best. This seems to be becoming more common unfortunately.

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Yeah please follow up. I'm sure other people will run into this same problem.

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One more suggestion - if you're working with a new lender for the refinancing, they might be able to help put pressure on the old lender. They deal with this stuff all the time and probably have better contacts than you do. Worth asking your loan officer if they can make some calls on your behalf.

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Plus lender to lender communication might get taken more seriously than borrower complaints.

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My commercial banker at First National actually did this for me once. Called the old lender directly and got it sorted out same day.

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Ava Johnson

UCC filing confusion with security agreement motor vehicle arkansas requirements

Really struggling here with a UCC-1 filing situation. We have a security agreement motor vehicle arkansas client where the borrower used different variations of their business name across documents. The original security agreement shows "ABC Motors LLC" but their registration paperwork has "ABC Motor Company LLC" and now I'm worried our UCC-1 filing might get rejected or be invalid because of the name mismatch. The collateral is commercial vehicles worth about $180k so getting this wrong could be catastrophic for our lien position. Has anyone dealt with debtor name variations on motor vehicle security agreements? I've heard horror stories about lenders losing their security interest over seemingly minor name discrepancies. The filing is due next week and I'm second-guessing everything at this point.

Been doing UCC filings for 15 years and name consistency issues are still the #1 cause of problems I see. The good news is that once you establish a systematic approach to verifying debtor names, it becomes second nature. Always start with the state business entity database, cross-reference with your loan documents, and when in doubt, get written confirmation from the debtor about their exact legal name.

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15 years! You must have seen every possible name variation problem by now. Any other common mistakes you'd warn people about?

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Oh definitely - watch out for entities that have changed their name since the security agreement was signed. Always check for amendments to the articles of incorporation. And don't assume the name on the loan documents is correct - I've seen plenty of errors there too.

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Update us when you get this resolved! I'm dealing with a similar situation on a equipment financing deal and want to see how your approach works out. The name consistency issue seems to be becoming more common as businesses operate under multiple variations of their names.

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Yes please update! These real-world examples are so much more helpful than just reading the UCC code provisions.

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Agreed - practical experience beats theoretical knowledge every time when it comes to UCC filings.

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Anderson Prospero

UCC commercially reasonable sale standards - equipment liquidation disaster

Our company had to liquidate collateral after a borrower defaulted on a $180K equipment loan. We followed what we thought were proper UCC commercially reasonable sale procedures but the debtor is now claiming we sold below market value and threatening legal action. The equipment was specialized manufacturing machinery that we advertised for 45 days through industry publications and online marketplaces. We got three bids and accepted the highest at $85K. The debtor says similar equipment sold for $120K elsewhere but that was 8 months ago in a different region. We documented everything but I'm worried we missed something critical in the UCC commercially reasonable sale requirements. Has anyone dealt with challenged sales where the debtor disputes the process after the fact? What documentation do courts actually look for to prove commercial reasonableness?

The timing of your sale matters too. 45 days of advertising sounds reasonable but did you consider market conditions at the time? If there was some industry downturn or seasonal factor affecting equipment values, that could support your defense.

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That's a great point to document. Market conditions at the time of sale are absolutely relevant to commercial reasonableness analysis.

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Exactly, courts consider the broader economic context. If the overall market was down, that supports your position that $85K was reasonable under those circumstances.

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This thread is making me realize I need to review our UCC sale procedures. We haven't had to liquidate collateral yet but want to be prepared. Should we have standard checklists for documentation and notice requirements?

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That's smart planning. I'd also recommend having a relationship with Certana.ai or similar document verification service before you need it. When you're dealing with a default, you want to catch any documentation issues early.

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Wish we had thought of that beforehand. Now we're scrambling to make sure everything was done correctly after the fact.

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